DPR20023 MERCHANDISING MATHEMATICS FOR RETAILING

DPR20023 Merchandising

Mathematic for Retailing

Course Synopsis:
Designed for those who need to strengthen their skills in retail
mathematics. It introduces the essential principles & techniques of
merchandising mathematics and explains how to apply them in
solving everyday retail business.

Credit Value:
3

Course Learning Outcome:

1. Calculate pricing & inventory data by using the suitable retail
merchandising mathematics tools.

2. Interpret the data by using the suitable merchandising methods in
solving a retail business problem

3. Demonstrate the ability to use a variety of techniques and
strategies in solving a retail business problem

Course Syllabus:

1. Overview of Merchandising Mathematics for Retailing 2.Cost
Volume Profit (CPV) 3. Trade & Cash Discounts 4. Markup &
Markdown Techniques as a Merchandising Tool 5.Inventory Valuation
in Merchandising Mathematics

Assessment:
Quiz (1) (10%) , Theory Test (2)(25%) & Portfolio (1)(15%)

TOPIC 1

Course learning outcomes (CLO)

Student should be able to:
• Define retail merchandising mathematics
• Explain various retail terminology use in merchandising

mathematics
• Understand the basic mathematical calculations frequently

used in making decisions related to merchandising activities
• Calculate and applying basic mathematical formulas to solve

merchandising problems

OVERVIEW OF MERCHANDISING
MATHEMATICS FOR RETAILING

INTRODUCTION

RETAILING RETAIL MATH IMPORTANT 2
Multifaceted topic that
Last step in the involves many levels of the To ensure you can operate
supply chain that retail process, including your business and produce
assortment planning, vendor enough cash flow to invest
moves the analysis, and mark-up and
products or goods pricing, and terms of sale. into your enterprise, you
or services from the must charge enough for
Important 1
producer or your product to be
suppliers to the final profitable

consumers Important 3

Merchandising

Retailing Retail Math Important 2

MERCHANDISING IMPORTANT 1 IMPORTANT 3

Retail function that involved all the Helps you realize if you can be To analyse the overall financial
activities of planning and control competitive with other companies health of your business, you will
the selling of goods and services in and profitable enough to sustain need to project revenue and
order to achieve a profit for the
your business and make a expenses for the future
retailer reasonable income

TERMINOLOGY OF RETAIL PRICING

1. COST 2. COST OF GOOD SOLD 3. SALES

A cost is an expenditure required Cost of goods sold (COGS), Sales revenue is the income
to produce or sell a product or also called the cost of sales, that a firm realizes from selling
get an asset ready for normal is total price of all inventory its products or services to the
use. In other words, it’s the sold to customers during a public. Usually, sales are the
amount paid to manufacture a period. Keep in mind that this net sales that the firm
product, purchase inventory, sell isn’t the retail price that the achieves minus the cost of
merchandise, or get equipment customers paid for the returned merchandise.
ready to use in a business goods. Instead, this is the
process. purchase price that it cost
the retailer to acquire or the

manufacturer to produce.

4. GROSS MARGIN 5. PROFIT

Gross margin, often called gross profit, is Profit, also called net income, is the
a financial ratio that measures how well amount of earnings that exceed
a company can control its costs. The expenses for the period. In other words,
gross margin formula is calculated by it’s the amount of income left over after
subtracting cost of good sold from the all the necessary and matched expenses
net sales during a period. are subtracted for the period. Notice I
didn’t say all the expenses that were

paid during the period.

TERMINOLOGY OF RETAIL PRICING

6. DISCOUNT 7. RETAIL PRICING

The definition of discount i A retail price is a cost paid for a
s reduced prices or good at retail stores
something being sold at
a price lower than that 8. SHRINKAGE
item is normally sold for.
Shrinkage is the loss or expense
recorded when inventory is
either stolen or destroyed

9. TERMS OF SALE 10. NET MARGIN

Credit terms or terms of credit is Net margin is the percentage of
the agreement between a seller revenue remaining, after all,
and buyer that lists the timing operating expenses, interest, taxes
and amount of payments the and preferred stock that have been
buyer will make in the future. deducted from a company’s total
revenue.

BASIC ARITHMATIC PRETEST

Rule 1 Objectives
When figures are given in ringgit To identify your strengths and
and cents amounts, use ringgit weaknesses in basic merchandising
sign (RM) with your final answer. mathematics.

Rule 2 Outcome
Round your final answer to the 1. It will help you improve basic
nearest hundredth (cent). Do
not round until you have the final mathematical skills that will enable you to
answer make effective merchandising decisions.
2. It is will help you to build confidence and
. work with accuracy in order to avoid
Rule 3 simple mistakes, which can be very costly
Use a comma to divide to a business.
thousands.
How it works
Work as rapidly as you can, but
do not work so fast that you
readily make mistakes. Let the
pre-test guide you in
determining where you need to
review.

DECIMAL NUMBER What is decimal number?

Decimal numbers are used to represent numbers that
are smaller than 1 unit

ADDITION

01 WHAT IS ADDITION

• The addition is the mathematical
process of putting things together.

• Addition usually signified by the plus
symbol “+” is one of the four basic
operations of arithmetic.

• The addition of two whole numbers is
the total amount of those values
combined

• In the simplest way, addition means
altogether, counting of two groups of
objects and finding how many in all.

02 EXAMPLE OF ADDITION

Lets Do some Exercise
(without CALCULATOR)

SUBTRACTION

01 WHAT IS Let's sing!
SUBTRACTION

• In math, to subtract means to take
away from a group or a number of
things.

• When we subtract, the number of things
in the group reduce or become less.

• The minuend, subtrahend and Eight little blue birds sitting on a tree,
difference are parts of a subtraction Five flew away, and then there were
problem.
three.
• In the subtraction problem, 7 – 3 = 4, the
number 7 is the minuend, the number 3
is the subtrahend and the number 4 is

02the difference.
EXAMPLE OF SUBTRACTION

Lets Do some Exercise
(without CALCULATOR)

MULTIPLICATION

• In math, to multiply means to add equal groups.
• When we multiply, the number of things in the

group increases.
• The two factors and the product are parts of a

multiplication problem.
• In the multiplication problem, 6 × 9 = 54, the

numbers 6 and 9 are the factors, while the
number 54 is the product.

• Here is another example of a multiplication fact
that shows multiplication is also repeated
addition.

DIVISION

The division is a method of distributing a group of things into equal parts. It is one of the four basic operations of
arithmetic, which gives a fair result of sharing.
The division is an operation inverse of multiplication. If 3 groups of 4 make 12 in multiplication; 12 divided into 3
equal groups give 4 in each group in division.
The main goal of the division is to see how many equal groups or how many in each group when sharing fairly.
For example:
There are 16 balls and 4 boxes, how to put 16 balls into four equal sized boxes?

So, 16 divided by 4 =?